6Opening of a branch
6.3. Calculation of Spanish corporate income tax
Below is a simple example of how Spanish corporate income tax and nonresident income tax is calculated on the profit obtained by a Spanish subsidiary or by the branch in Spain of a foreign company, respectively. (For further information, on these taxes, see section 2.1. of Chapter 3).
| UE country (1) | Treaty country | Non-treaty country | |
|---|---|---|---|
| Subsidiary: | |||
| Profit of Spanish subsidiary | 100 | 100 | 100 |
| Spanish income tax (25%) (2) | 25 | 25 | 25 |
| Dividends | 75 | 75 | 75 |
| Withholding tax on dividends | _(4) | 7.5(5) | 14.25(3) |
| Total tax in Spain | 25 | 32.5 | 39.25 |
| Branch: | |||
| Profit of Spanish branch | 100 | 100 | 100 |
| Spanish income tax (25%) (2) | 25 | 25 | 25 |
| Profit remitted to the parent company | 75 | 75 | 75 |
| Withholding tax | _(4) | _(6) | 14.25(3) |
| Total tax in Spain | 25 | 25 | 39.25 |
| (1) Spain has tax treaties in force with all EU countries except Denmark. (2) The general corporate income tax rate is 25%. (3) Withholding tax rate = 19%. (4) Exempt, provided certain conditions are met. (5)The withholding tax rate on dividends used. (6) The branch profit tax will apply if provided for in the corresponding tax treaty (e.g. Canada and Brazil). |
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